CFTC Will Not Enforce Certain Swap Rules in Connection with Bridge Bank Transfers

Commentary by Nihal Patel

The CFTC said that it will not pursue enforcement actions in connection with certain swap rules related to transfers of swaps to recent FDIC-established "bridge" banks.

In a public statement related to the FDIC actions as to Silicon Valley Bank and Signature Bank, the CFTC acknowledged that certain "qualified financial contracts" of those entities were transferred to "bridge" banks and determined that if any swaps would be subject to regulations as a result of FDIC-ordered transfers, the CFTC would not commence enforcement actions for violations of its rules resulting from those transfers.

The CFTC "recognized" difficulties in fulfilling reporting requirements associated with the transfers and encouraged reporting counterparties to "use best efforts" to fulfill reporting obligations for such swaps. Further, the CFTC said it will consider reporting relief as appropriate.


Given that neither of the banks in resolution were swap dealers, the bulk of this relief will impact CFTC-registered swap dealers with whom the banks transacted.

It would be good if the bank regulators and SEC issued similar relief for relevant swap and security-based swap rules they administer.

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